Anyone who says they know exactly what happens next is lying. One popular theory is that Boehner's failure moves the final bill somewhat to the left. It proves that any compromise will need a large number of Democratic votes, and that means Boehner needs to agree to the sort of bill that can pick up a large number of Democratic votes.
Another possibility is that Boehner pulls back and moves to his right. His speakership is undoubtedly endangered, and it's possible he will choose to shore up his flank rather than raise the debt ceiling. That would be dangerous for the economy, but it is not, given last night's humiliation, unthinkable.
Perhaps the primary wild card is what happens when the market opens today. If Wall Street assesses this as yet another day of Washington nonsense en route to an inevitable deal, then congressional leaders will find they have a bit more time to dawdle and negotiate. If the market decides that Boehner's inability to control his caucus is evidence that things really are different this time, it could drop precipitously. If that happens, the leadership of both parties might dispense with the legislation meant to message and figure out how to pass the legislation meant to lift the debt ceiling. It would be about time.
It's really not that hard to see what the final deal will eventually look like. And in a sense, last night's vote -- or, more to the point, non-vote -- is irrelevant to it. Boehner was aways going to need to assemble a coalition of more moderate Republicans and Democrats to get a deal. Last night's vote was a referendum on Boehner, but it had little to do with reaching an actual deal. So the optimistic spin is that the GOP's failure will move the Republican leadership to embrace the bipartisan strategy they were always going to have to adopt at the end. The pessimistic spin is that they now know pushing a compromise bill through the House could truly harm their careers and will hide from it. But they can only hide for so long. That's the problem with being in the leadership. Eventually, you have to lead.
Five in the morning
1) The Boehner vote has been delayed another day, report Lori Montgomery and Paul Kane: "House Republican leaders delayed until at least Friday a white-knuckle vote on legislation designed to ease the nation’s debt crisis, after hours of scrambling in vain to lock down the last votes needed for passage. Majority Whip Kevin McCarthy (R-Calif.) told reporters shortly before 10:30 p.m. that there would be no vote Thursday night on the bill, which would increase the federal debt limit in two stages in exchange for major spending cuts. The vote had been scheduled for around 6 p.m. Thursday, but as that hour neared, GOP leaders realized they didn’t have the 217 votes needed to send the measure on to the Senate. So the House suddenly took up a series of non-controversial measures, leaving befuddled lawmakers debating whether to rename a post office in Hawaii before finally going into recess for an indefinite time."
No Democrats will vote for the bill: http://politi.co/pJDqMr
2) The White House is considering backing a combination of the Boehner and McConnell plans, reports Greg Sargent: "One idea being floated in multiple private discussions would in effect be a fusion of the Boehner plan and the original McConnell plan to transer control of the debt ceiling to the President. The idea would be to preserve the joint commission that Boehner’s plan sets up, and also preserve the spending cut targets in Boehner’s plan. But rather than have those tied to two debt ceiling hikes, the President would have the power to hike the debt ceiling unilaterally in keeping with McConnell’s plan, unless a two-thirds veto-proof Congressional supermajority disapproved of it (which wouldn’t happen)...If the committee didn’t reach the goals, automatic cuts of some kind would be triggered automatically."
3) Harry Reid is pledging to table the Boehner bill should it pass, reports Felicia Sonmez: "Senate Majority Leader Harry Reid (D-Nev.) pledged Thursday afternoon that the Senate would defeat House Speaker John Boehner’s plan to raise the nation’s borrowing limit if it passes the House. Does that mean that the Boehner plan would no longer be an option? Not exactly. If the proposal by Boehner (R-Ohio) passes the House...it would then head over to the Senate. But Reid’s pledge Thursday didn’t mean that he planned to bring the measure up for a straight-up-or-down vote. Instead, if the Senate votes on the measure...it would be - in congressional procedure-speak - a vote on a motion to table the motion to concur on the House amendment. That vote would require a simple majority for passage."
4) Businesses are drawing up contingency plans for if the debt limit isn't raised, reports Renae Merle: "With congressional leaders still scrambling to reach an agreement to raise the federal borrowing limit, some U.S. companies are beginning to prepare for the uncertainty that would follow a government default or a potential downgrade of the country’s credit rating. Some companies are increasing their cash reserves...About half of the 302 companies recently surveyed by the Association for Financial Professionals said they were likely to take no action if there is a federal default or downgrade. But that appears to be changing, said Tom Hunt, the association’s director of treasury services. During an online meeting with some members Thursday, about 60 percent said they were holding more cash to hedge against a potential government default, he said."
5) Stocks are still steadily falling in the absence of a deal, reports Cezary Podkul: "Stocks ended Thursday mostly lower ahead of a crucial vote to break the debt impasse in Congress, extending several days of losses and sending investors toward safer investments. The Dow Jones Industrial average, a basket of 30 blue-chip stocks, fell .51 percent, marking its seventh straight day of losses. The Standard & Poor’s 500 Index, a broader measure of market performance, retreated .32 percent, marking its fourth consecutive decline. The Nasdaq, a more tech-heavy index, ended the day up .05 percent, breaking three days of declines. But the declines were tempered by a Department of Labor report showing fewer Americans filed for unemployment benefits last week, 398,000 versus the previous week’s 422,000 and well below analyst expectations."
Music video interlude: St. Vincent's "Actor Out of Work".
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Still to come: Today's economic report likely won't bring happy news; health care reform will increase spending, according to a new report; House Democrats want the administration to get tough on corporate political donations; the House is weighing a number of environmental riders; and animals in sweater vests.
Today's GDP report isn't set to wow anyone, reports Neil Irwin: "So just how bad was it? That’s the question that new data on the nation’s overall economic growth will answer Friday morning when the Commerce Department releases its report on gross domestic product from April through June. And the only sure thing is that it will not inspire dancing in the streets. The consensus forecast of economists surveyed by Bloomberg is that GDP rose at a 1.8 percent annual rate in the second quarter, about the same as the 1.9 percent rate of growth in the first quarter...But even if the number comes in somewhat higher than economists are expecting, it will be no cause for celebration. The U.S. economy is capable of growing at about 2.5 percent a year over the longer term...But when the economy grows at that rate, the labor market can only tread water."
The House GOP is opposing an SEC plan to let shareholders oust directors, reports David Hilzenrath: "House Republicans are accusing the Securities and Exchange Commission of wasting time and money on a plan to make it easier for shareholders to oust members of corporate boards. The criticism comes days after a federal appeals court shot down the SEC plan. The court said the agency failed to do its homework before changing the rules of corporate elections last year to let shareholders put candidates on the official company ballots. Three senior members of the House Financial Services Committee called on the SEC to provide an accounting of the time and money it spent on the initiative. The SEC’s investment in the undertaking 'demonstrates a serious mismanagement of the agency’s priorities,' wrote Reps. Scott Garrett (R-N.J.), Jeb Hensarling (R-Tex.) and Randy Neugebauer (R-Tex.)."
This recovery seems to be proving that financial crisis recoveries are fundamentally different, writes Binyamin Appelbaum: "Roughly four years since the start of the financial crisis, and two years since the official end of the resulting recession, what has taken hold in their wake is a new kind of great moderation -- an era of slow growth. 'The problem is that some persistent and deep currents are restraining our progress,' John C. Williams, president of the Federal Reserve Bank of San Francisco, said on Thursday. Perhaps the most important is the closely linked combination of housing and consumer spending. It is a longstanding pattern that the Americans recover from recessions by building more homes and filling them with things. But there is no need to build homes while millions sit empty."
The Boehner plan is necessary, if insufficient, writes Charles Krauthammer: "Consider the Boehner Plan for debt reduction. The Heritage Foundation’s advocacy arm calls it 'regrettably insufficient.' Of course it is. That’s what happens when you control only half a branch. But the plan’s achievements are significant. It is all cuts, no taxes. It establishes the precedent that debt-ceiling increases must be accompanied by equal spending cuts. And it provides half a year to both negotiate more fundamental reform (tax and entitlement) and keep the issue of debt reduction constantly in the public eye...I’ve been arguing (in this column and elsewhere) for precisely such a solution: a two-stage debt-ceiling hike consisting of a half-year extension with dollar-for-dollar spending cuts, followed by intensive negotiations on entitlement and tax reform."
Obsession with "balance" pushes policies rightward, writes Paul Krugman: "The cult of balance has played an important role in bringing us to the edge of disaster. For when reporting on political disputes always implies that both sides are to blame, there is no penalty for extremism. Voters won’t punish you for outrageous behavior if all they ever hear is that both sides are at fault...[Obama] not only chose not to make an issue of G.O.P. extortion, he offered extraordinary concessions on Democratic priorities...A Democratic president who bends over backward to accommodate the other side -- or, if you prefer, who leans so far to the right that he’s in danger of falling over -- is treated as being just the same as his utterly intransigent opponents. Balance!"
Retro news interlude: MTV reports on this newfangled thing called the "Internet" in 1995.
A report suggests health care reform will increase spending slightly, reports Brett Norman: "The Affordable Care Act will drive health care spending up slightly, to nearly a fifth of the country’s gross domestic product by 2020, while extending insurance coverage to 30 million more Americans, a new report from CMS projects. But health care’s hefty share of the country’s economic output is reached through an average annual growth in medical spending of 5.8 percent over the next decade -- just 0.1 percent more than would have been spent without the health reform law, the report claims. CMS published its findings this morning in Health Affairs. The report also projects that once all the data are in, health spending in 2010 will have grown a historically low 3.9 percent -- slightly lower than the previous record low growth of 4 percent in 2009. That’s an aftershock of the recession."
HHS is launching "co-ops", the not-a-public-option public option replacement, reports Sam Baker: "The Health and Human Services Department formally released a funding opportunity Thursday to create health insurance cooperatives, a new type of plan authorized under the healthcare reform law. Co-ops must be nonprofit entities that reinvest extra revenues into either lowering premiums or improving the quality of care. Although they were originally pitched as an alternative to the controversial public option, co-ops cannot be run by a government entity. HHS previously described the two rounds of funding opportunities for potential co-ops, including planning loans and a separate round of loans to help co-ops meet state solvency requirements."
House Democrats want tougher campaign finance rules for government contractors, reports T.W. Farnham: "More than 60 House Democrats have signed a letter asking President Obama to issue an executive order requiring federal contractors to disclose political contributions. The proposal is one of a handful floated in the wake of the Supreme Court’s landmark Citizens United decision last year, which loosened restrictions on corporate political advocacy. The letter indicates the strong support among rank-and-file Democratic lawmakers for a measure that has been attacked by Republicans....In April, the White House first circulated a draft of the executive order, which would have required companies bidding on federal contracts to disclose political donations from their corporate coffers and top executives, including contributions to nonprofit advocacy groups that would not otherwise be a part of the public record."
The House GOP is targeting the FCC's net neutrality policies, reports Brooks Boliek: "Suspicious that the FCC’s net neutrality order was orchestrated by outside liberal interests, top Republicans on the House Energy and Commerce Committee asked agency officials Thursday for documents to show whether that is indeed the case. The emerging probe, which critics dismissed as a partisan fishing expedition, focuses on allegedly improper contact before the December net neutrality vote between the FCC and the Obama administration and public interest groups. In a letter to Democratic FCC Chairman Julius Genachowski, committee Chairman Rep. Fred Upton (R-Mich.) and other senior Republicans asked for details of contacts between the commissioners and commission aides leading up to the commission’s 3-2 vote approving the rules on Dec. 21."
Health costs will prevent any progress in domestic policy, writes Michael Gerson: "In the Congressional Budget Office’s projections, health-care costs account for basically 100 percent of our exploding debt in the coming decades. In about 40 years, health-care entitlements -- Medicare, Medicaid, SCHIP and Obamacare -- will overtake spending on everything else in the budget, including Social Security, defense and domestic discretionary spending...One consequence would be to rule out any broad innovation on domestic policy. To make room for unreformed entitlement commitments, discretionary spending would be so squeezed that even existing programs on education, hunger, poverty and homelessness would be tough to maintain."
Tumblr interlude: Animals in sweater vests.
The House is considering a series of riders on environmental issues, report Darryl Frears and Juliet Eilperin: "For environmentalists, it was something to shout about. In a rare show of defiance, 37 House Republicans broke party ranks two days ago and voted with Democrats to strike an amendment from an appropriations bill that forbade the Fish and Wildlife Service from listing any new plant or animal as endangered. In telephone calls and e-mails, environmentalists at groups such as the National Wildlife Federation and Defenders of Wildlife called the vote 'historic' and 'awesome' in surprised reactions. But a long list of other amendments aimed at weakening environmental protections at the Department of Interior and the Environmental Protection Agency brought them back to Earth."
The EPA is proposing the first-ever federal fracking rules, reports Andrew Restuccia: "The Environmental Protection Agency floated Thursday first-ever federal regulations aimed at cutting harmful air pollution from a natural-gas drilling technique called hydraulic fracturing. Under hydraulic fracturing, or 'fracking,' water, sand and chemicals are injected into the ground to gain access to valuable natural gas reserves. The practice is dramatically expanding in the United States, boosting the natural gas industry while raising new concerns about the technique’s environmental costs. The proposed regulations require reductions of smog-forming emissions at new or modified wells that are drilled using hydraulic fracturing."
A commission is recommending abandoning the Yucca Mountain nuclear waste site, reports Steven Mufson: "A blue-ribbon commission assigned by President Obama in January 2010 to come up with an alternative to the plan for a nuclear waste repository at Nevada’s Yucca Mountain will recommend that at least one new site be found to store waste left over from the nation’s nuclear power plants, people familiar with the report said Thursday. The commission -- chaired by former Democratic congressman Lee Hamilton and Brent Scowcroft, national security adviser to President George H.W. Bush -- does not suggest where that storage site would be located. Their report, to be issued Friday, does urge the creation of a new federal corporation to manage the site, rather than turning it over to the Energy Department, which is responsible for managing nuclear waste."
Closing credits: Wonkbook is compiled and produced with help from Dylan Matthews and Michelle Williams.